In the first quarter of 2021, Brazil’s economy increased faster than projected, extending its recovery from a coronavirus pandemic recession, as many people chose not to shelter in place during COVID-19’s second wave.
According to figures issued Tuesday by the national statistics office, Latin America’s largest economy increased 1.2 percent in the fourth quarter. This was higher than the 0.7 percent consensus expectation of economists polled by Broadcast, Agencia Estado’s real-time financial news service. The growth was led by a 5.7 percent gain in the agricultural sector, which was followed by a 4.6 percent gain in the construction industry.
After a 4.1 percent recession last year, Brazil’s economy has recovered to pre-pandemic levels of activity, which was less than those of neighboring nations, some of whose economies dropped by twice as much. The extensive pandemic welfare program, which touched nearly a third of the population and boosted activity, had a big role in this.At the same time, President Jair Bolsonaro criticized pandemic-fighting regulations, claiming that economic activity should not be halted, and he persuaded many local authorities and inhabitants.
“Even with the second wave of the COVID-19 pandemic, GDP [gross domestic product] grew in the first quarter, given that, unlike last year, there weren’t as many restrictions that impeded economic activity in the country,″ Rebeca Palis, the statistics agency’s GDP survey coordinator, said in a statement.
COVID-19’s effects was amplified by increased activity, according to health experts, and some have begun warning that a third wave may be on the way. The country’s daily death toll has fallen from over 3,000 in mid-April, when Brazil was the virus’s worldwide epicenter. According to Our World in Data, an online research site, it is still the world’s second-highest at 1,850 meters.
The main component of demand in Brazil’s economy, family consumption, slowed in the first quarter. According to Palis, this reflected the end of pandemic welfare by the end of 2020, a challenging employment market, and double-digit food inflation. The assistance program was resumed in April at a much lower level, yet the impoverished in Brazil continue to suffer.
Last month, the economics ministry lifted its GDP projection for 2021 to 3.5 percent, in line with market experts polled by the central bank, who had lifted their projections for six weeks in a row, to 3.96 percent. Revisions followed evidence revealing that Brazilians who needed to make a living or were burnt out on quarantine continued to work.
The GDP data released on Tuesday back up those leading indications. According to a letter from Alberto Ramos, director of Latin America economics, Goldman Sachs upped its 2021 GDP prediction for Brazil from 4.6 percent to 5.5 percent after the data was released.
“Overall, the data confirm that Brazil’s economy held up pretty well during the virus waves in the first quarter – and that seems to be what’s happening in Q2 too,″ In a note, William Jackson, Capital Economics’ chief developing markets economist, wrote.